Both the Highlander and Lowlander services stop at Watford northbound to pick up. The Lowlander stops at Watford southbound to set down. The Highlander only stops at Watford southbound if it has a problem and needs to "tip out" passengers so it can go straight to Wembley Traincare rather than risk getting stuck on the approach to Euston.
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They replaced the seat with a solo standard berth (apparently the seating car was "out of commission" yet was still attached to the rake!).
A few years ago one of the crew told me about a similar incident where the lighting had failed in the seated car before leaving Inverness (why they need lighting when people are supposed to be sleeping I don't know - one of those health and safety things). Anyway, the train was lightly loaded, so they were able to offer all passengers a cabin, which they gratefully accepted.
All except one - one guy who had had a few too many "nightcaps" wouldn't move - he had paid for a seat, he said, and he wanted a seat. Eventually the police had to be called to extract him, and on getting him back to the (police) station they found he was wanted for a whole string of minor offences. Now wouldn't you just keep a bit quiet in those circumstances?